Proposed highway plan deficit is a useful planning tool

Monday

Sep 16, 2013 at 3:15 AM

New Hampshire’s Ten-Year Transportation Plan includes a deficit of $955 million. Ten years of projects that cost $3.5 billion are proposed while there is only $2.5 billion of funding available. Is this any way to run a railroad? Actually, it’s a pretty good way.

In 1985, then-governor John Sununu created a planning process called the ten-year highway plan by executive order. Now a state-law, the ten year plan is a road map of all of the projects the state’s plans to undertake over the next ten years and the funding available to pay for them. This again is an area where sensible government prevails in New Hampshire over a Washingtonian model (here as in most places you should read Washington as a synonym for indefensible lunacy).

Every two years, New Hampshire debates a comprehensive list of state priorities in transportation — a list of bridges to be repaired or replaced, roads to be repaved, giant wasteful overhead tolling projects to be undertaken. The list is meant to be an actual plan not a wish list. We had trouble a few years ago when the sum total of the projects took 30 years of funding to pay for 10 years of construction. Today, the list is realistic.

The Washington model, by contrast, is to funnel money as political favors to states and projects favored by the most powerful politicians whether their state has that as a priority or not. Washington spending is built on politics not priorities. Our 10 year plan removes personal politics from the process almost completely.

At the beginning of the process, the state Department of Transportation creates a draft plan to serve as the basis of discussion in public hearings. That plan turns into a recommendation from the governor and amendment and adoption by the legislature this coming June.

The draft plan has a $955 million deficit. Ordinarily, I’d be critical of a planned deficit but in this case a deficit is a critical part of the planning process and counter-intuitively serves the cause of transparency.

First, the deficit is exaggerated. Funding for airports is limited to funds raised and grants received. There are $200 million of projects with no funding that will happen if federal air money comes and won’t happen if it doesn’t.

The other two deficits are a potential turnpike capital program and the ongoing highway shortfall. The small portion of roads we call turnpikes are self-funded by tolls and bonds, and the bond payments themselves are also funded by tolls. The state proposed a series of projects that can only happen if tolls go up enough to fund increased debt payments. In this case, the deficit is essentially a proposal for $500 million of turnpike spending.

The administrators are not asking for more money in general. They have proposed projects and we are being asked whether those specific projects are important enough to us that we will pay for them. We support the projects, we have to support the tolls. Our choice.

This is good government. All too often, politicians tell us in vague terms that “more revenues are needed” or “to balance all spending, we need a general infusion.” The problem with this overly-general approach is that we don’t have any specific idea what government looks like if we say no and what the incremental funding would specifically support. Instead, to try and get us to support more money, they imply that that one specific project everyone loves and would be funded anyway is the one on the bubble.

The transportation approach is more honest. The money we have will pay for this. We would fund these additional things if given the chance but the money isn’t there. Then you and I get to decide whether or not it’s worth it.

The highway fund portion of the transportation budget (paid with proceeds from federal gas taxes, state gas taxes, and other vehicle fees), is actually another $237 million short. This is no surprise. Our gas tax was set 23 years ago at 18 cents and revenues don’t come close to keeping up with inflation. Each year, we must fix fewer bridges and pave fewer miles of roads. Rather than foregoing new projects, the highway fund side must find things we do today that we won’t do in the future. That gap over ten years is about $237 million.

The current phase of the ten year plan is about making choices. At this level of funding, only these priorities are funded for the next ten years. No politician can pretend that money is needed for an already funded project or pretend that he supports a project even without funding.

Charles M. Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free-market think tank in Concord.

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